You’ve built a strong, trusting relationship, you’ve decided to get married, and you’ve begun planning for your long-term goals together. Soon enough, it’s time to embark on the process of planning your financial future together as a couple. You begin to weigh options and think ahead with an eye towards the financial growth needed for things like purchasing a house, raising children, sending them to college, taking family vacations, retiring comfortably, buying a private island that comes with an expensive pet tiger trained to hug you, and whatever else might be on your bucket list. You likely hear lots of people tell you that it’s important to diversity your assets and invest broadly, and you probably have that one nerdy friend sporting a shirt that says “HODLGANG” who can’t shut up about cryptocurrencies. “Have you guys bought any Ethereum yet?” is his constant reprise every time you meet.
Actually, he’s not wrong. Crypto is shaping up to be an important asset of which to be aware and consider purchasing as you merge and plan your finances. In fact, 66% of millenials have more faith in crypto than in the stock market (Economic Times, 2021). An ambitious generation, millenials value instant gratification. In terms of investments, this means favoring assets with high returns over a relatively short duration of time. Most assets don’t yield high returns quickly, but crypto can often be an exception (although it’s also risky and volatile). Nevertheless, since its inception in 2009, Bitcoin has outperformed the traditional market every year except 2018 (Economic Times, 2021).
Here are a few more reasons why millennials and cryptocurrencies are a match made in heaven:
-Millennials are one of the most spontaneous generations yet, and tend to appreciate that cryptocurrency trading and transactions are not relegated to business hours. Crypto can be traded or invested 24/7 (Economic Times, 2021).
-Unfortunately, the millennial generation rarely has access to a pension from their employers. Therefore, even at a young age they need to seek investments to add to their retirement portfolios. As a young generation, cryptocurrencies can be a wise investment because millennials can afford to take risks and experiment with their investments as they add to their retirement portfolios gradually over time (Economic times, 2021). Now is the time to jump on the bandwagon and investigate!
However, some couples shy away from crypto because they don’t understand it. Learning about cryptocurrencies comes with such a wide array of new vocabulary and radically new concepts that it can feel like learning another language. But fear not! It is not necessary to become a blockchain expert in order to make wise crypto investments. Let’s take a look at some super basic crypto background info + recommendations for your first cryptocurrency investment.
Bitcoin: The First Cryptocurrency
Invented in 2009, bitcoin gave rise to a new era of decentralized digital currencies and blockchain technology (Reiff, 2021). Crypto expert Ryan Allis defines blockchain as “a new type of database that stores its data across multiple computers instead of just one centralized computer. A ‘block’ is a collection of data and a ‘chain’ is what ties the blocks together across multiple computers.”
Here are some of the reasons people love bitcoin, many of which also apply to other cryptocurrencies:
-Because there is a fixed amount of bitcoin that can be created (21 million bitcoins) It cannot be inflated
-It isn’t controlled by governments
-It cannot be taken away
-It is decentralized; information about bitcoin transactions and ownership is stored on many different computers worldwide, rather than in the database of one particular institution. Therefore, it cannot be banned or stopped.
-It uses less energy than the banking industry and gold mining, and there are efforts in progress to get bitcoin computers running on renewable energy (Allis, 2021).
In early 2021, bitcoin reached new highs and then fell by 50% in April. However, many experts believe that Bitcoin is at its lowest point of this cycle right now and that it will again reach new highs later this year (Allis, 2021). So, this moment may be an optimal time to invest in bitcoin.
In case you’re not convinced yet, a new study straight out of Yale suggests that an investment portfolio which holds at least 6% bitcoin is likely to yield higher returns and mitigate risk (Georgiev, 2021).
Tips for Investing in Cryptocurrencies
-Use Weiss Ratings to evaluate your choices before making a purchase. A = potentially excellent investment; E = very weak investment (Wasik, 2018).
-Don’t invest more than 5% of your liquid assets in any one cryptocurrency, no matter how promising it appears. It’s just as important to diversify your crypto portfolio as it is to diversify your assets overall (Wasik, 2018).
-Never buy when a cryptocurrency is surging in value! Buy in small amounts when the market is at a low and keep adding to your portfolio gradually if and when a particular currency continues to fall (Wasik, 2018).
-Don’t invest exclusively in the biggest and most popular cryptocurrencies; include some newer and smaller cryptos, as well (Wasik, 2018).
-Store your crypto in your own personal self-controlled crypto wallet, not in an exchange, where it could be compromised (Wasik, 2018).
-Store your login information somewhere secure and in a location which you won’t forget. Also, share it with someone you trust (Wasik, 2018); getting locked out of your account because you forgot or lost access to some bit of crucial information is not fun and could ultimately cost you a lot of money if it happens at the wrong time.
5 Low-Risk Cryptocurrencies to Invest in This Year
Here are some highly-recommended cryptocurrencies in which to invest in 2021, plus some background info on what makes each one unique and what you should know about it.
Ethereum
-Second-largest cryptocurrency in terms of market cap (Reiff, 2020)
-Doubles as a digital currency + platform for developers to build and run decentralized apps which don’t experience downtime, fraud, or third-party control (Shumba, 2021).
-Allows one to deploy smart contracts, or contracts that are automatically executed once conditions have been met
-Can be used for a diverse array of purposes: to store value, make payments or as collateral (Reiff, 2020), or even to earn interest or play games (Coin Telegraph, 2021).
Cardano
-Reputed for being sustainable and scalable
-Recently upgraded to also offer smart contracts, enabling it to compete with Ethereum (Shumba, 2021). For this reason, it may be wise to hold both Ethereum and Cardano in your portfolio.
-Low transaction fees = easily affordable + highly profitable (Ganguli, 2021)
Dogecoin
-Started as a meme honoring Elon Musk’s nickname as the “Dogemaster”; has become super important this year and is trending in the crypto market
-Cheap
-Reliable (Ganguli, 2021)
Nano
-No transaction fees
-Considered 2021’s most affordable crypto coin (Ganguli, 2021)
-Hailed for being an eco-friendly crypto due to the fact that no mining, printing, or minting of new tokens is required
-Instant transfers (White, 2021)
Ripple
-Digital payment platform utilizing a cryptocurrency called Ripple for transactions
-One of the top cryptocurrencies to buy for early retirement, as ranked by Yahoo finance
-Currently one of the world’s largest cryptos when it comes to market capitalization (Kabir, 2021)
-Among the most affordable cryptocurrencies; market price around $3.50 (Ganguli, 2021)
Protecting Your Digital Assets with A Prenup
Marriage can be wonderful, and divorce is usually… awful. Protect your digital assets (and relationship!) by adding these assets to your financial schedule in your prenup. At the end of the day, it is healthier for everyone if you don’t have to debate with your spouse over who owns the bitcoin.
The preparation of a prenup can help in more ways than one. For example, a prenup can set out the expectations for the management of these digital assets during your long and financially secure marriage. Some individuals are better at maintaining certain assets, or managing money than others. Even in a happy marriage, clearly defining who is in charge of certain assets, or who owns certain assets may save you a major argument.
We have discussed many of the positives of entering into a prenuptial agreement with your fiancé, ya know, everywhere on this website, but here is a little review:
- Protect assets
- An opportunity to discuss finances with your future spouse
- Save money and time on legal fees in the event of a divorce (hopefully you never have to deal with this!)
- Protect inheritance
The Bottom Line
Although you should probably not invest all your money in crypto as it is a very new and volatile system (Wasik, 2018), it’s an asset which is rapidly growing in importance and prominence. A diverse investment portfolio which includes a range of cryptocurrencies is an investment in your own financial future as a couple as well as the financial future of the world. Crypto can and should be listed as an asset in your financial schedule on your prenup!
References
Allis, Ryan. 2021. Are we at the Crypto Bottom yet? We Think so. Retrieved from: https://coinstack.substack.com/p/are-we-at-the-bottom-yet
Allis, Ryan. 2021. Crypto: Explain it Like I’m 5. Retrieved from: https://coinstack.substack.com/p/crypto-explain-it-like-im-5
Coin Telegraph. 2021. What is Ethereum: An Explanation in Plain English. Retrieved from: https://cointelegraph.com/ethereum-for-beginners/what-is-ethereum
Economic Times (2021). 3 Reasons Why Millennials Need to Diversify Investments in Cryptocurrencies. Retrieved From: https://economictimes.indiatimes.com/markets/stocks/news/3-reasons-why-millennials-need-to-diversify-investments-in-cryptocurrencies/articleshow/80840141.cms?from=mdr
Georgiev, Georgi. 2021. New Yale Study: Every Portfolio Should Include 6% Bitcoin (At Least). Retrieved from: https://bitcoinist.com/new-yale-study-every-portfolio-must-include-at-least-6-bitcoin/
Kabir, Usman. 2021. 10 Best Cryptocurrencies to Buy for Early Retirement. Retrieved from: https://finance.yahoo.com/news/10-best-cryptocurrencies-buy-early-204926412.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAChswWf_zFA2vzF5XqAcWPo5clhslAmXbQ8xbRZHhr4Ix9jhdmGKb7tv9IWl4JR088V_th4TpxSElusRV_kHCygnrfV7VAhjy9fEhIb83ijSm9szDmCjQWI74_bP8Ga_yn7ukYjvqeLgWNy8S348nV_GqTHLXahWySAIWMpJxfp1
Reiff, Nathan. 2020. Bitcoin vs. Ethereum: What’s the Difference? Retrieved from: https://www.investopedia.com/articles/investing/031416/bitcoin-vs-ethereum-driven-different-purposes.asp
Reiff, Nathan. 2021. Were There Cryptocurrencies Before Bitcoin? Retrieved from: https://www.investopedia.com/tech/were-there-cryptocurrencies-bitcoin/
Shumba, Camomile. 2021. Cardano has completed an upgrade that will mean it can bring advanced smart contracts and DeFi to its blockchain. Retrieved from: https://markets.businessinsider.com/currencies/news/cardano-network-upgrade-will-bring-smart-contracts-and-defi-blockchain-2021-7
White, William. 2021. Nano Coin: 10 Things to Know About NANO as Investors Search for the Most Eco-Friendly Crypto. Retrieved from: https://www.nasdaq.com/articles/nano-coin%3A-10-things-to-know-about-nano-as-investors-search-for-the-most-eco-friendly
Julia Rodgers is HelloPrenup’s CEO and Co-Founder. She is a Massachusetts family law attorney and true believer in the value of prenuptial agreements. HelloPrenup was created with the goal of automating the prenup process, making it more collaborative, time efficient and cost effective. Julia believes that a healthy marriage is one in which couples can openly communicate about finances and life goals. You can read more about us here Questions? Reach out to Julia directly at [email protected].
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